Freddy Mac and Fannie Mae are at the White House trough again as they continue their “Dance Macabre” with Federal Bailout Assistance.
When I was a kid growing up here on Amelia Island, we didn’t get a chance to do any “farming” type work as we were mostly into boats. We were however lucky in the way that Dad had a friend who raised hogs just over the Georgia line and we would visit his “farm” at least once a year.
Charlie was the man who raised the hogs and he would always take me out to the “parlor” to visit them. I must say I was amazed watching them as they were constantly eating.
Charlie had a saying that has stuck with me for many years until today. He said politicians and government agencies were like hogs as they would always do two things. One, always come back to the trough to eat and two, always demand more. As I grew older I’ve observed many instances where Charlie was right. Now however I can honestly say that the hogs at least gave a lot back, something I can’t say about politicians.
Remember when we talked about Freddie and Fannie, you know those Real Estate cousins who just can’t get enough of our company, excuse me, our tax dollars? Remember how the government threw a couple of hundred billions at them within the last year? Well, they are at the trough once again, and they want more. Yup, they are in trouble and need just a few “billion” to bail them out. Will the government give it to them? My bet is absolutely they will. Should they?
Well folks I’m not trying to downplay our Real Estate mess, as it is a mess that will continue to deepen. I see no end in sight. As a matter of fact, if anything, I see it getting worse within the next twelve months. Monthly there are many home owners going under water. Many of these folks are making the decision to just simply walk away for a rental property or sit tight and quiet as long as they can stay under the radar of “overworked” bank appraisers. They say, “and why not?”. What do they have to lose? If they tried to sell the home, the cards are stacked against them from the beginning. If the home is under water then it will become a “short sale.” Anyone in the industry will tell you the majority of these sales never make it and it is usually a living nightmare. Next should they find a buyer, chances are the buyer will need a loan and/or sell their current home. Tried getting a mortgage lately? an impossible task within itself. So what are the options left for the home owner? Stop making payments or walk away?
Either way it will give both Freddie and Fannie something to complain about for the next round of the $6 trillion in mortgage write-offs on their books. Well…at least a part of that. 16% is the current estimate or close to a Trillion dollars still to come.
They’ll better negotiate a permanent seat at the Washington trough.